Yes, Another Science Blog

Wednesday, May 10, 2017

(I am writing this down because every few weeks, William gets attacked as a corporate shill and a sellout human being. That's because he works for Elsevier and because most people have no idea who he is. I know William and am writing this down so I can refer to it, every time he is attacked on Twitter.)

I first met William Gunn in 2013, when protocols.io was just an idea and we were nearly broke. William instantly connected to our mission and became determined to help us. He connected us to Victor Henning, the cofounder of Mendeley, for a Skype call. That call was critical and the advice from Victor may have saved our nascent startup.After that, William continued to advise us, advocate for us, and helped us to succeed with our Kickstarter. He was so genuinely supportive and gave us so much of his time, I offered to make him an advisor and to give him standard advisor equity in protocols.io. William thanked me and replied that he was helping because of what we are doing for science, not because of compensation. I insisted, as I didn't want to take advantage of people who help. William asked to think about it. A week later, he e-mailed me to say that he thinks it would be a conflict of interest for him to take advisor equity, given his employment with Mendeley/Elsevier.

Since then, William has continued to help us consistently and in big ways. He is also a terrific scientist, one of the strongest advocates for open access, and a passionate supporter of innovation in science publishing and communication.

I don't have many warm thoughts about Elsevier, but I have tremendous respect for William and deep gratitude for his support. Those who attack him simply because he works at Elsevier are confusing individuals with corporations. I am lucky to know William as a person and will try to never make the same mistake.

Thursday, October 13, 2016

Twenty years ago, an elderly tailor in Brooklyn, NY sexually assaulted me. I was 19. I never reported it. Only my closest friends and relatives knew about it until now.

I came in to shorten pants from a hand-me-down suit. The tailor closed the curtains and asked me to take off my jeans. He measured my legs. Then he pulled down my underwear and proceeded to do things that I am not able to share even now.

I didn't scream. I didn't beat him up, even though I was way taller and bigger than him. My brain froze. I thanked him and left.

A few years later I saw this episode of Friends. While millions laughed, I lost the ability to sleep for a few nights.

I am sharing this now because of every Trump supporter who is saying, "These are fabricated stories that are politically motivated attacks. If these charges were true, the women would have spoken up before."

I haven't spoken up before. Many reasons not to, even for a man like me. Even against an old shriveled pervert tailor, I didn't speak up. For a woman to speak up against Donald Trump would be infinitely harder.

I didn't say anything 12 or 20 years ago. However, if that pervert tailor surfaced publicly now and tried to run for political office, you bet I would have decided to come forward, just as I did here.

Tuesday, September 20, 2016

I have lost count of the number of headlines with, "Trump has finally crossed a line..." The problem is that short of openly calling for genocide, there are no more lines left for Trump to cross.

I understand the shock and outrage with each new despicable utterance from Trump. The problem is that by reacting to each new one with "this is the final one!" we implicitly pardon everything else that he said. We suggest that everything before was forgivable. We give cover to the people who still endorse him.
-----------------------------------------------[just a small sample of the "crossed the line" headlines]
Sept. 20, NPR: With Donald Trump's Birther Spin, He's Crossed A Line.

Saturday, June 25, 2016

It seems that every few months, a new startup scam comes up on our radar. It's always someone claiming that they will make it easy for you to get millions for your startup if you just pay them a little bit first. I have written before about these pay-to-pitch schemes like the Keiretsu forum and have put together a guide to avoiding the scammers and parasites.

Still, one more timer-waster, Hanover International, managed to get fairly far, despite our experience and guard against these schemes. This was a group that was recommended to us by someone we trust, so we met with them. In the very first meeting, just to be certain I wouldn't be wasting my time, I told them that we don't participate in "pay-to-pitch" schemes and don't work with "introducers" who want a monthly fee for connecting to investors. I shared our above blog posts to nail in that point.

In response, I was assured that Hanover is legit and they don't do shady things like the terrible Keiretsu forum that charges $5,000-$10,000 for the honor of presenting to potential investors who won't invest in your startup. I searched for any scam reports on Hanover International, but unlike the countless hits for Keiretsu, found none. So, I went forward and had three different calls with a bunch of people from Hanover, including its founder Jim Hock. Jim stressed repeatedly that VCs are bloodsuckers who just want to enrich themselves, in contrast to Wall Street banks that invest for the good of the startup.

The line about Wall Street versus VCs sounded like total bullshit to me, and I wasn't too surprised when the product of our conversations was a proposal from Hanover to work with us towards getting a round from investment bankers, at the rate of $2,500/month plus equity. They required a minimum of 4 months of payments, which would be $10,000 - in fact twice as much as what the Keiretsu scammers tried to charge us. That's $10,000 of cash plus equity in the company for some preparatory work and introductions. Steep, especially considering that I reiterated multiple times prior to their proposal that under no circumstances would we pay any retainers or upfront cash.

“Iconic and wonderful,” Donald J. Trump said at a South Carolina town hall event last year, praising the 86-year-old Art Deco tower as one of his great possessions. The presumptive Republican presidential nominee also told fans in Maine that critics who mock his failed companies should focus instead on the Manhattan skyscraper. “They don’t want to talk about 40 Wall Street,” he said.

But the 72-story building has housed frauds, thieves, boiler rooms and penny-stock schemers since Trump took it over in 1995 in what may be the best deal of his career. No single property in his portfolio is more valuable than 40 Wall St., according to a Bloomberg valuation of his assets last year. And no U.S. address has been home to more of the unregistered brokerages that investors complain about, according to the Securities and Exchange Commission’s current public alert list.

Since my mother lives in New York, I asked her to stop by 40 Wall Street and check for Hanover. Yep, no sign of the company or Jim Hock anywhere in that building. I called Jim, confronted him, and he feebly attempted to come up with excuses. I then told him to stay away from us and wrote an angry e-mail to their entire group. The comical full exchange is below.

As I just expressed to Jim over the phone, we would like to disengage.

Frankly, I am surprised that it took this long with the phone calls and emails, wasting everyone's time. I was crystal clear in my first meeting with Michael on February 26 that we do not participate in pay-to-pitch arrangements. At the first meeting, I shared these blog posts with Michael:

Two weeks ago, over the phone, I was explicit that we would not be paying a retainer fee. Still, you sent the proposal asking to be paid thousands of dollars per month. In fact, we would pay you under that more than the $4,500 that Keiretsu asked to pitch their investors.

I am disappointed, to say the least.

Lenny

P.S. It also doesn't help that you loudly list 40 Wall Street as the corporate address for Hanover, but there is no record of Jim Hock or the company in the Trump building. When I asked you Jim about this, you said you are sharing on the 18th floor, but you list 28th at NIBA. All combined, none of this looks good.

We are in receipt of your most recent email and we must disagree with your declarations. We, as Hanover International provide advisory services including the preparation of marketing materials, PowerPoint presentations, and executive summary and enhanced business plan preparation and investor relations. In addition we position a company to be introduced to applicable investment banking houses based upon industry and capital requirements.

We had decided after your phone call of stating that you could not pay our fees that we would go ahead on good faith and introduce you to selected investment banking houses. We, as a team have spent hours going through that process on your behalf and you have decided not to avail yourself of that process.

The proposal we sent to you was for discussion purposes only. It was not a contract. In an email on March 30 you replied that it “looks good” in regards to document. Further, in that same email you suggested an alternative to our monthly fee. You asked would we consider receiving greater equity in a described protocol for our services.

We told you and re-iterated on conference calls with the members of the Hanover team that we do not work for “success fees” or commissions for capital raises as they are not in compliance with securities rules and regulations.

We ceased utilization of “executive offices” in New York at 40 Wall Street due to the fact that we were offered a better deal at 44 Wall Street and are moving there. The reason for the delay of this moving process is that Jim Hock has been dealing with serious medical issues and could not travel.

Finally, any claims about us that may be misinformed or irresponsible is both wrong and harmful and we will protect our reputation accordingly.

We sincerely wish you the best of luck and future success in all of your endeavors.

Thank you for the reply. You did not say or re-iterate on our calls that you are not a registered dealer/broker. I assume that is what you mean by saying that you "cannot do success fees".

I do not see how I could have been more clear to Michael and everyone else that we would not be paying a retainer. That is why I sent the blog posts. That is why I repeated multiple times via phone and email that we would not pay upfront. That is a terrible deal for startups and in most cases is a border-line scam.

If you think that what you are doing is fine, then so is the Keiretsu operation.

You tell me you "ceased" utilization, but Jim Hock told me this morning that you are there, just under a different name.

Your explanations simply confirm to me that I have wasted my time.

Lenny

---------------------------------------

[Note: It's been almost 3 months since the exchange, and "40 Wall Street" is still the address on the Hanover website.]

Thursday, March 24, 2016

I have family members who are big supporters of Trump. Whenever we discuss his outrageous and hateful ideas, I am told, it's just the media and liberal spin on the moderate and reasonable ideas of Trump. Most recent e-mail exchange:

Me:I have no reason to think he [Trump] is an anti-Semite. But the stuff he says on racial issues is deeply revolting. Just because it's about Muslims and Mexicans doesn't mean I am okay with it. I am not listening to any pundits. I am listening to Trump and that's the part that makes me deeply uncomfortable. Most of the vitriol is coming directly from him. And that's what my question is about...

Relative: Give me quotes directly from Trump. Make sure to include all the sentences before and after the offending words, then read them twice, and then we can discuss each one. You will be pressed to find anything to support what you just said. You'll see - it's truly amazing what the media does even to smart people.

So as a resource for those whose family and friends are Trump supporters, I am starting the following list. Not quotes from newspaper articles. No bias/spin/out-of-context/clipped quotes. Just a simple list of things Trump says himself on his Tweeter account.

On science:

To all haters and losers: I am NOT anti-vaccine, but I am against shooting massive doses into tiny children. Spread shots out over time.

Tuesday, March 8, 2016

I don't like paranoia and baseless frenzy. I hate it when people throw around "Nazi" and "Hitler" comparisons on social media, as people constantly love to do. And everyone who was around in 2008 and 2012 and witnessed the United States electing Barack Obama, both times, should realize that the U.S. today is not where Germany was in 1930. The candidates for the Democratic nominee just discussed racial blindspots and white privilege in the debate on Sunday. And both Hilary Clinton and Bernie Sanders are more likely to be elected than Trump. So, as Marco Rubio would say, let's dispel with the notion that the U.S. is Nazi Germany.

In fact, it seems that 11% of Muslims support Trump. I personally know Jews who are huge fans of Trump. Their reasoning is that Trump doesn't believe any of the vile stuff that he spews. It's just a tactic to get elected. But do we know what Hitler believed? Here's the first mention of Hitler in the NYT (hat tip Jens Foell):

Out of curiosity, I found the first NYT reference to Adolf Hitler. Nov. 21, 1922. Amazing last three paragraphs. pic.twitter.com/VhBnlSsfNm

Yes, Trump may just be a cunning opportunist. He may get elected and turn out to be the most open and socially liberal politician in the history of our country. Sure, non-zero chance of that. But we have absolutely no evidence to suggest that this is the case. And what if we elect him and it turns out we are wrong? What is the price of that?

I may be an overly-cautious Jew. Having relatives who died in the Holocaust surely plays into my perspective on politics. But white supremacists aside, who is comfortable with the stuff below?

Monday, February 22, 2016

After four years as a co-founder of protocols.io, I can confirm that the startup ocean is infested with sharks. However, in our experience, none of these sharks are actual venture capitalists. They are not investors but parasites and scammers posing as investors or promising to help you connect with real VCs in exchange for cash/equity.Here's a good example of someone who has wasted months of our time. Please do read about a classic scam artist John Spangenberg.

Spangenberg prefers to go by "Johnny" and posed as an impact investor with an active fund interested in investing in protocols.io. He said exactly what we wanted to hear, and from November 2014 through the end of February 2015, asked for numerous meetings and documents as part of due diligence. It took these three months for us to realize that he was wasting our time and to ask him to never contact us again (full exchange below). That was two months before the above article.

I have been planning for a year now to write this simple guide for finding good investors. After bumping into the expose of Johnny today, I can't delay it any more.

The truth is that there is no formula for matching startups and investors. No matter how good your company, you have to talk to many to find the right fit. But from the scores of VCs I have spoken to, there is a common theme to the good ones:

They value your time and ask good questions.

The questions match your stage of the company.

Whether or not they invest, you typically learn from the conversations with them and can use the feedback to improve your presentation and company (like getting negative review on an academic paper, it's important to use the rejection/criticism to improve your paper rather than to lash out at the reviewers).

They quickly let you know what they are looking for, whether you fit, and if your startup is too early, what needs to happen before they will invest. (Quickly is usually a matter of 1-4 weeks.)

On the flip side, below is a list of characters and organizations to avoid like the plague. Like all first-time founders, we have lost precious days on these parasites, and I detail the below to hopefully save some others for wasting just as much.

Introducers. These are folks who promise to connect you to VCs in exchange for equity, a retainer, and often a percentage of your raised round. RUN RUN RUN from them.

Investors who are meeting with you just because they invested in a competing startup and want insider information.

Pseudo-investors who do not have actual cash or an active fund (see more on Johnny below).

Investors who won't quickly tell you "yes/no" but are dragging you through making charts and documents for them that are entirely irrelevant for your stage of the company (for example, financial projections and time-to-profit graphs before you have started building your product).

We have been approached and distracted by a few in each of the categories above. Because of a good bullshit detector, we have never lost any equity or cash to these leeches. But we did lose a lot of time. Time, to a startup, is as valuable as cash - guard this precious resource and avoid the parasites.

---------------------------------------------------Founders and investors, please share your tips on how to find the good ones and avoid the fraudsters. Please comment below (or on this Twitter thread, and I will add the advice to the post).---------------------------------------------------

[Below is the e-mail exchange with Johnny once we realized that he is wasting our time.]

Thank you for taking the time to connect with Irina today. I hope that you now have enough information to decide whether or not you want to include protocols.io in the tentative list of companies for the fund that you are raising.

I hope that once you raise the fund, we can reconnect, update you on protocols.io's progress, and help you make the final decision on whether or not protocols.io is the right fit for your fund.

I also hope you are not offended by the bluntness of this e-mail. It is just that startups can ill-afford tentative conversations with investors who do not at the moment have an active fund and are in a position to to make the yes/no call. Our board and advisors have repeatedly cautioned us not to get distracted by potential VCs who are interested in protocols.io but are not able to make the funding call at the moment. I tried to communicate as much to you, but I must have not done a good job. I am sorry about that.

Kind regards,

Lenny

P.S. I also want to share my perspective on cash-flow projections. I know they are a normal part of business school, but they are inappropriate for young startups. We have raised $800K in the last 2.5 years. Neither the angels nor the VC group that invested asked for cash-flow. Only one potential angel asked us for 5-year spreadsheets, and not surprisingly, he bailed and chose not to invest at the last second. Below is the message I sent to him back in 2012.

-----------------

Dear ...,

We enjoyed our phone conversation and really appreciate your advice. Attached is a revised 5-year projection model. Since we cannot realistically estimate the risk of our company, we applied discount rates typically used by VCs when valuing early stage startups. Please note that we are not at the stage to be valued by VCs yet.

While we agree that this is a good exercise, we want to caution against over-interpreting the numbers. Take everything in these models with a HUGE grain of salt. There are just too many assumptions. We are estimating total number of protocols, job postings, ads sales, our expenses, and on and on. These are important and solid exercises. They show what the revenue model is and why we are likely to strike gold. But they are too speculative to take seriously now.

Of course, it is critical to have a good business model. But our budget to get there and the actual revenue are a moot point. For classic manufacturing and service startups, such calculations are essential and realistic. For tech. startups, they are mostly irrelevant. That's because the most likely scenario is that a year or two from now, once we have the repository, user base, and traffic, we will be bought by Nature Publishing Group, or Merck, or ResearchGate, or Google without getting a single dollar of revenue.

It may sound delusional, but we would argue that for an angel investor, that is essentially the only scenario that matters. Most tech. startups fail. The return comes from a 10-15% of the ones that succeed, but those that succeed, do so wildly. Angel investors make 75% of their profits from the 7% of companies that hit the ball out of the park. The goal of the angel investor is to invest in the one company out of many that will give a 10-30x return.

Can we guarantee success? Of course not! If we could, we wouldn't be talking to investors. Angel investors take a huge risk, but they do so because of the insane possible return.

Obviously, we think we have a good shot at this. Hence the initial seed funding of $100K from us. Hence Alexei quitting his lucrative job and plunging in full time. We know that there is risk and we are willing to bet on this company. We are the main angel investors here, in addition to being the founders.

Dear Lenny - your friends are absolutely right. Both investor and investee as principal and agent need to engage in a constant due diligence. Trust is not a given but something that has to be earned over time, sometimes through tribes and tribulations. Working together engine and gasoline in an symbiotic relationship has to be compelling for both sides of the transaction.

Will soon provide all potential impact investees at sky deck with an overview of our Stanford-Berkeley incubator impact funds, likely structured as a $50m public mutual funds and traded on the stock markets.

Meanwhile all the best in elevating protocol.sio into the next growth level, expectantly profitable growth.

As to money questions, I respectfully disagree with your (casuistic) and somewhat arrogantly diagnosis. Finance is the semantics of business. Value is defined by McKinsey as the future net inflow of cash. The 2000 internet bubble showed that eyeballs can never substitute coldhearted cash so that inspecting financial projection has become a legitimate part of any proper due diligence. I'm sure you will get used to it if and when you mature your interesting business.

I agree that a business model which is "let's get users" is often a bad approach to a startup. As you know, we are not in that group. It is critical for a startup to have a solid business model and to take steps towards validating it and attaining revenue.

Where we disagree is the value of cash-flow projections. They are indispensable for larger and more mature companies. I asked all of our advisors and and some investors on the appropriate way to handle your request for the projections. That is because, as a scientist, I fear they are misleading for a young startup. Here is a quote from a VC at O'Reilly's OATV fund in response to my question about projections for seed-stage startups:

Thank you for your clarification, Lenny. My view as an investment banker (that is perhaps contrarian to other advisors) is that long-run cash flow projections should play a role at every stage in the firm's cycle, for the sake of balanced capital project decision making. There is merit in the discipline to identify the monetization model and the underlying assumptions on capex, opex and sources of income and their impact on free cash flow.

But obviously operational and demand-side non-financial metrics in most cases outweigh financial metrics in valuing business at the seed stage. And...And: I welcome an all-inclusive approach with respect for the nature of each particular stage for balanced decision making.

As to the impact funds, I believe - based on what I've seen so far - that protocols.io has potential for inclusion as portfolio company in our impact mutual funds. Once we've completed a reporting template for all Stanford and Berkeley incubators, we will definitively reconnect.

Meanwhile, I wish the team all the best in achieving its semi-anual targets.

Pax et bonum - Johnny

--

JFA Spangenberg MSc PhD

Chairman GeoSteward & GeoTreasuries Inc.

Climate Risk Secured Bonds EcoVillages

55 Broad Street - New York New York

555 California Street - San Francisco

World Trade Centre - Vancouver

Hong Kong Stock Exchange

---------------------------------------------------------

[Two weeks later, Johnny spammed me about an animal welfare nonprofit that he was starting, which apparently is part of his fraud.]

Inspired by St Francis who loved the animals as part of our vibrant community of "all living creatures", I am (with Pillsbury Law SF) incorporating a 501(c)3 organization focused on animal cruelty disclosure on an international basis.

You can't control what is unmeasured - following Transparency International fighting financial corruption, I aim to devise a simple animal cruelty index (dept of the suffering times duration) and public (movements in) cross-country, cross-industry, cross-company differences. Transparency will ameliorate ignorance, will enhance consumer choice, trigger legal reform and increase accountability / law enforcement.

Fact-based information will make investors think twice or encourage them to divest in jurisdictions with excessive animal cruelty. Someday, animal cruelty will be rendered unconstitutional (like human slavery) - hopefully our joint efforts may contribute to bring that day forward - paraphrasing the words of Martin Luther King: that will be a glorious day when our society sweltering with the heat of eco-injustice, sweltering with the heat of animal oppression, will be transformed into an oasis of freedom and ecojustice.

Ghandi once said that how a society treats its most vulnerable species, the animals, is a visible indication of the standard of its moral integrity. By combining the animal cruelty index with the financial corruption index (Transparency International) and the Gini-coefficient for measuring income disparity (World Bank), it is possible to create a robust composite index; a comprehensive benchmark of moral integrity for international comparison and public disclosure.

Of course, animals have nothing to do with this. I am just extremely disappointed in our interactions. The evening I met you, you conveyed that you are an impact investor, with a fund, and five companies in which you have already invested. It took way too much time to discover that you are only preparing to raise a fund, which may or may not happen.

We all feel at protocols.io that we have invested a lot of time into our communication. Time that is in critically short supply. To be honest, we feel used.

Dear Lenny - Why did it take so long for you to become straightforward?

You seem to be a bright individual and leading a promising company, but I am developing personal doubts due to what I believe to be character flaws. I have gradually learnt to know you as impulsive, unpredictable, inpatient, even inflammatory at some times; risking to destroy critical relationships. Those are frankly not the best qualities for creating long-run shareholder's value in a balanced fashion. I am convinced however that as time goes by, you will grow into more seasoned leadership without compromising intelligence and energy - just my 2 cents.

You complain about wasting time. Investing is a two-way street. It seems the two of us invested precious time in exploring synergies. Advisory delivered by me during our discovery was meanwhile mostly appreciated by you, provided you meant what you were saying in earlier emails.

Nobody is perfect. I happen to believe the potential of protocols.io outweighs the downside of our personal chemistry. We are quickly building our $50m "Money and Meaning" Stanford-Berkeley impact funds, leveraging on almost 200 incubator companies in the valley at different stages in their early cycle.

Nobody is irreplaceable (including myself). I am prepared to delete protocols.io from our impact platform unlocking the capital base of specific impact investors, as of immediate effect. I hope you will not exercise that option, but the choice is of course entirely yours.

Respectfully yours - Johnny Spangenberg

As a postscriptum, I added two relevant articles. Apologies if the articles are already known to you.

I also agree that there is a certain efficiency (maybe ruthlessness) to the way I do business. I try hard to not waste other people's time and to make sure ours is equally respected.

So far, this has served us well. We have accepted some and rejected others as investors. No regrets at this point. However, never before have I been disrespectful; whenever saying "no thank you," I have done so politely and without destroying any relationships. And never before have I been as angered by an investor.

Because I am very transparent and upfront, I crave the same in return. Usually, that is what I get from investors. Yet, in this instance, it seems that you misrepresented your position for a long time, while having complete honesty from us.

I feel that you did not respect us and our time. Perhaps you meant no disrespect. Perhaps you were not intentionally vague for the longest time about not actually having a fund.

Whatever the case may be, I also agree that investment is a two-way street. But I am convinced that without chemistry, investment would not be prudent from your side, nor from ours.

I wish you and your fund luck, but please do remove protocols.io from consideration for your portfolio.